Obamacare Delay’s Winners and Losers

Last week’s big news — that Obamacare’s employer mandate was sidelined for another year — was framed as a win for business.

As originally written, Obamacare mandated that businesses with 50 or more full-time employees must provide their workers with coverage or face penalties of as much as $3,000 per employee beginning in 2014. But that date has been pushed back until 2015.

Businesses have long complained about the burdens of the law’s reporting requirements because employers must detail which months each worker and any of their dependents were covered by health insurance, according to government officials. As early as June 2012, the Business Roundtable noted in a comment letter that the reporting requirements would demand “substantial changes in administrative procedures and reprogramming of recordkeeping systems.” Randy Johnson, a senior vice president at the U.S. Chamber of Commerce told Bloomberg after the announcement that “the administration has finally recognized the obvious — employers need more time and clarification of the rules of the road before implementing the employer mandate.”

But, in reality, an estimated 96 percent of all companies in the United States — about 5.8 million out of the 6 million total — have fewer than 50 full time employees and therefore are exempt from the employer mandate portion of the Affordable Care Act. Only about 10,000 of those 5.8 million companies would be subject to the employer responsibility requirement, according to The Fiscal Times. “The vast majority of employers who were subject to the mandate already offer health care coverage to their workers, so really not a whole lot should change, one way or another,” Larry Levitt, a senior vice president at the Kaiser Family Foundation, told the publication.

The latest delay is raising new questions about the fate of Obamacare, and those concerns could play a role in the 2014 mid-term election; if the employer mandate is behind schedule, will the individual insurance exchanges be ready to begin operating on October 1? While these uncertainties will not be resolved anytime soon, there are clear winners and losers as a result of this postponement.

Here is a look at who is celebrating the delay and who is worried about the future of Obamacare:

Winners:

1) Medium-sized Businesses: The one-year delay in the employer mandate will give the government time to addresses complaints from businessmen and trade associations about the burden of Obamacare’s reporting requirement and their confusion regarding regulations that have yet to be completely finalized. For example, many businesses are unsure what actually constitutes a full-time employee and how much information they are required to submit to the Internal Revenue Service to determine whether employees qualify for coverage on the new insurance exchanges.

“It’s going to be a mess,” he added. “It’s going to be very difficult for years to get this sorted.”

2) Republicans: Some analysts have postulated that the Obama administration’s unexpected delay could disrupt Republican plans to make Obamacare the center of their midterm election strategy. However, the postponement does support the GOP’s argument that the Affordable Care Act is not working the way the administration promised. House Speaker John Boehner, an Ohio Republican, said that the decision “means even the Obama administration knows the ‘train wreck’ will only get worse.”

Next year, Democrats must defend 21 Senate seats, while the Republicans face losing just 14 seats. The GOP has already begun campaigning against the Senate Republicans who voted in favor of the health care reform law in 2009.

3) The Federal Budget and the Economy: Tax penalties charged to companies that do not comply with the employer mandate were only expected to raise a modest $5 billion in revenue in 2014, the Congressional Budget Office predicted, which is less than two-tenths of a percent of the $3 trillion in taxes the government will collect next year. This means that the delay will have a minimal impact on the budget. What the postponement will do is remove a source of economic pressure from businesses this fall; implementation of Obamacare and health insurance costs were listed as the primary fear of mid-range companies, according to an April survey conducted by Ohio State University’s National Center for the Middle Market.

Comparatively, the delay will hit President Barack Obama and Congress hard.

The health care reform was the president’s signature accomplishment, and without it, his list of accomplishments is much shorter. “The problem the president and the administration is going to have is [explaining] their signature wins,” Peter Hart, a prominent Democratic pollster, told The Fiscal Times. “If they end up sort of whittling away health care and then follow that up with whittling away immigration reform, then you think, boy they’ve given away an awful lot for … political peace.”

But, more importantly, those individuals without health insurance who are the employees of medium-sized or larger businesses will be robbed of the opportunity to get coverage through work. Many of them will be able to purchase health insurance on the online exchanges being set up by states and the federal government, but with this most-recent delay, fears are growing that individual exchanges could be delayed as well. Furthermore, if they fail to sign up for coverage, they will be penalized while employers will be exempted from penalties for the next year.